I see you’re using a three point scale, which is quite common. The most common approach is to use a five-point rating scale, with 1 representing “needs improvement” or “unsatisfactory,” and 5 representing “exceeds expectations” or “outstanding.” Some organizations may use a different number of points on their rating scale, such as yours using a three-point scale or a ten-point scale, but the five-point scale is most widely used and recognized. This style of rating performance on a scale is totally fine but I suggest adding details and examples to help your employees understand exactly how to improve their performance.
Another approach is to use a narrative evaluation, where the manager provides a written assessment of the employee’s performance, including strengths and areas for improvement, similar to a SWOT analysis. This approach can be more time-consuming but provides a more detailed and personalized assessment of the employee’s performance.

Here’s a few articles on performance reviews that you may find helpful!
Annual Performance Review: Guidelines for Supervisors
How to Conduct Meaningful Employee Performance Reviews
5 Performance Review Legal Traps to Avoid